Five of the Best: High yield bonds for uncertain times

Steven Logan, the co-manager of SWIP's £1.3bn High Yield Bond fund, has picked five high yield bonds to give investors stability in an uncertain environment.

Cardboard box manufacturers might not sound like the most exciting place to invest, but if investors want to avoid sleepless nights in a subdued market, bonds such as these are the place to snap up stable and recurring income, according to  Logan.

Here are his top five picks:

1. Iron Mountain - The global cardboard-box manufacturer provides storage for companies legally required to keep business records for up to 20 years. The company has stable revenues and strong recurring income because businesses are legally obliged to pay for this kind of service, Logan said.

2. Ardagh Glass - The number two glass bottle and tin can manufacturer in Europe also has stable revenues and high recurring income. "It has the ability to pass through higher input costs, and has well-hedged energy costs. You get paid well to be there," he added.

3. Smurfit Kappa - Another cardboard manufacturer, Ireland-based Smurfit Kappa is dominant in the European market, and specialises in providing packaging for the food and beverage industry. "Smurfit has strong business presence in Europe and Latin America. Although its earnings might come under pressure in a tough economic environment, it is still a strong cashflow generative business."

4. Taylor Wimpey - UK-based housebuilder Taylor Wimpey has recently issued two-year bonds with an attractive 10% coupon. "The company has now sold off its North American business, leaving it cash-rich and very attractive despite the challenges faced by the property market worldwide," said Logan.

5. WIND - The Italian mobile phone company has caught the eye of a few bond managers, despite the precarious position of the country's domestic economy. "It gets criticised because it is based in Italy, but no matter how bad the economy is doing people will not turn off their mobile phones. Wind has strongly outperformed its rivals and is currently bidding for four new government contracts," he said.

The SWIP Corporate Bond Plus fund has returned 15% over three years against a 18.9% average and 0.9% over one year against an average of 1.2%, according to Morningstar.